Texas Districts Merge Health Plans

Hoping to drive down their insurance costs, the two largest school
districts in Texas have formed a partnership to seek out health-care
coverage for their 47,000 employees.

The Houston Independent School District brings 28,000 employees to
the arrangement, while the Dallas Independent School District adds
another 19,000. Their school boards approved the deal last month.

It's not unusual for school districts—especially small
ones—to join forces to share the costs of educational services,
such as psychologists, or to make equipment purchases. The five-year
merger between the big districts on health care is unusual,
however.

"We're combining the two largest districts in the state. That's much
different from what's been done in the past," said Charles Fridia, the
operations executive for the Dallas schools' financial-operations
department. And it may be just the beginning, he said: "Potentially,
we'll add more districts."

No one is predicting just how much the districts might save, but the
partnership will be put to the test soon.

The current health-plan contract in Dallas runs out in December.
Employees in the 162,000-student district will be watching closely to
see how the new process works. They may be forgiven for being
skeptical, though.

Last year, Dallas school officials revealed they had lost track of
the district's previous health-care contract deadline, and then were
forced to scramble to come up with an emergency, one- year policy that
increased premiums for most employees.

"It didn't work well for people who moved from preferred providers
to [health maintenance organizations]," said Maureen Peters, the
executive vice president of the Alliance of Dallas Educators, an
affiliate of the American Federation of Teachers. "There were
three-month waits for primary-care doctors."

Currently, Dallas employees pay as little as $30 a month for single
coverage and up to $682 a month for the most costly family plan. In
Houston, the lowest rate for single coverage is $10 a month, while the
top family plan costs $543 monthly.

Statewide Issue

The new partnership calls for two health- care consultants to the
210,000-student Houston schools—William M. Mercer Inc. and
Automated Data Inc.—to outline a health-coverage strategy for the
Dallas district and to negotiate Dallas' premiums.

"They should be able to find better rates for insurance for more
employees, and with better flexibility," said Roy Kemble, the president
of the Classroom Teachers of Dallas, an affiliate of the National
Education Association. "But the proof will be in what kind of program
they come up with."

In addition to promising lower costs, the arrangement will allow
Dallas employees, like their colleagues in Houston, to register by
computer for their coverage, thus reducing the paperwork burden for
district employees, who last year were deluged by some 13,000
applications for coverage.

Responding to similar concerns from across the Lone Star State, the
Texas legislature, which meets once every two years, is now debating
policy proposals that would add teachers, for the first time, to the
health plan that covers state employees.

But with a price tag of $2 billion, it is unlikely that teachers
will get a plan comparable to that of the state employees. Instead,
lawmakers are looking at a program that would cost half that.

Still, Ms. Peters is pleased that the state is finally trying to
improve the coverage, which could help alleviate the teacher shortage,
teacher activists say.

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